Peter Wang was asleep at his home in Beijing last Monday when police officers arrived before dawn to detain him, saying he had helped organise a protest planned for later that day.

Across the city, others who had lost money investing in China’s online peer-to-peer (P2P) lending platforms – including some who had travelled from as far away as Shandong and Shanxi provinces – got similar visits from police.

By the time they were released, the demonstration they had planned using social media chat groups had fizzled amid a massive security response around the China Banking and Insurance Regulatory Commission (CBIRC) headquarters in the heart of Beijing’s financial district.

Instead of demanding that the government bail out the hundreds of collapsed P2P companies, those who made it to the protest area were forced onto buses and carted away to Jiujingzhuang, a holding centre for petitioners on the outskirts of Beijing, according to two P2P investors.

“Once the police checked your ID cards and saw your petition materials, they knew you are here looking to protect your rights. Then they put you on a bus directly,” said Wang, who works at an auto repair shop. He joined a separate, smaller protest in a different part of Beijing after his detention. “There was no channel to solve any problems. All they care about was preventing any disturbance.”

The size of China’s P2P industry is far bigger than in the rest of the world combined, with outstanding loans of 1.49 trillion yuan ($217.96 billion), according to data tracker p2p001.com, run by the Shenzhen Qiancheng Internet Finance Research Institute.

P2P, in which platforms gather funds from retail investors and loan the money to small corporate and individual borrowers, promising high returns, started flourishing nearly unregulated in China in 2011. At its peak in 2015, there were about 3,500 such businesses.

But after Beijing began a campaign to defuse debt bubbles and reduce risks in the economy, including the country’s enormous non-bank lending sector, cracks began to appear as investors pulled their funds.

Since June, 243 online lending platforms have gone bust, according to wdzj.com, another P2P industry data provider. In that period, the industry saw its first monthly net fund outflows since at least 2014, the data provider said.

The latest burst of anger, which led to the planned protests, flared up ahead of a June 30 deadline for companies to comply with new business practice standards, which are still being finalised but could include bank custodianship of investor funds and tougher disclosure requirements.

Many of them shut down rather than do so, Zane Wang, chief executive of online micro-loan provider China Rapid Finance, told Reuters. That caused panic in the broader market. Investors tried to pull funds from P2P companies, causing liquidity problems for many smaller operators, Wang said, although larger ones are faring better. “Some platforms might become a winner out of this, and some platforms, probably a large portion of the platforms, might not be able to make it,” he said.

China’s propaganda machine has swung into action as Beijing seeks to reassure people that the Chinese economy and financial markets are healthy despite a trade war with the United States and steep declines in the value of stock prices and the yuan.

No mainland Chinese media – official mainstream papers or more independent-leaning publications – reported the attempts to protest in China’s capital.

Many would-be protesters were forced to give fingerprints and blood samples and prevented from travelling to Beijing. Some were even removed from Beijing-bound trains ahead of the protests, said a Shanghai-based P2P investor who lost 1.3 million yuan. She declined to be named out of fear for her safety.

Even after the demonstrations were effectively snuffed out, hundreds of security personnel patrolled around CBIRC’s office, highlighting authorities’ sensitivity to any form of social instability.

The CBIRC did not respond to an emailed request seeking comment. The Ministry of Public Security did not respond to a fax seeking comment.

MESSY CLEAN-UP

Peer-to-peer lending was pioneered by firms like LendingClub in the United States, but in China it has expanded on a massive scale as firms piggy-backed on the government’s drive for financial innovation to serve credit-starved small and mid-sized private companies.

The industry expanded too fast for regulators to keep up.

Many P2P platforms lend to customers that might be deemed too risky for a commercial bank. That has in cases led to liquidity crises, when too many investors demand their funds at once if loans appear to be going south.

There have also been cases of outright fraud, the most well-known being Ezubao – a $7.6 billion Ponzi scam involving more than 900,000 investors.

More than 100 companies listed in China’s domestic stock markets are involved in P2P operations, and 32 of those own more than 30 percent of a P2P company, according to a July research report by CITIC Securities.

China extended by two years a separate June 30 deadline for an online finance clean-up campaign. But rather than calming matters, it created more uncertainty, market watchers said.

CITIC Securities estimated that under the clean-up campaign, only about 100 platforms out of 1,836 would be able to meet even today’s regulatory standards and obtain a license. Less than 50 would thrive.

Experts say larger companies would probably benefit from firmer regulation. But for now, listed companies in the industry have seen their share prices take a beating.

Shares of some of the Chinese P2P companies listed in the U.S. have plunged. China Rapid Finance shares have lost 73 percent so far this year, while Yirendai has slumped 71 percent. PPDai has dropped 44 percent, and Hexindai 27 percent.

Officials with PPDai declined to comment.

In a news release, Hexindai said it would improve risk management “and further reduce credit risk.”

Tang Ning, founder and chief executive officer of CreditEase, the majority owner of P2P lending platform Yirendai, told Reuters that he was concerned that the “industry-wide panic” would escalate.

He urged regulators to “act with a sense of urgency” to protect good P2P companies while punishing bad players to avoid harming China’s financial system and economy.

“Otherwise, it will be ‘winter’ for the industry. All companies will be hit, both illicit and compliant. Everyone will lose and that’s a situation no one wants to see,” said Tang. “Small businesses will lose an important, or the most important source of funding. That’s not only hurting the financial system but also the real economy.”

For Wang, the Beijing investor, the pain is acute. He and his family had invested 7 million yuan – their life savings, with which they had planned to use to buy a home at the end of the year – in two P2P platforms that have shut down.

They recovered none of their investment.

“We are financial refugees, not mobsters. The only thing we want is to get back our money, at least a portion of it,” said Wang.